What are basic financial terms mean? What is a financial plan? What are the guidelines to keep in mind when starting to manage your financials?

1. FUTURE
INTEREST

2. What will you learn in this
chapter?
• What are the basic principles of saving money?
• What types of savings and investments can you
consider?

3. DO NOT SAVE WHAT IS
LEFT AFTER SPENDING.
SPEND WHAT IS LEFT
AFTER SAVING
- Warrent Buffet
Words to Ponder

4. When should you
start saving?
Start as soon as possible
• You can start a saving right now from you
allowance, gifts or part time job
• It is okay to start with 5-10%, developing the
habit of saving is the first step
• Once you get your first time job increase the
amount that you save to 20%

5. HOW TO
STRUCTURE
YOUR SAVINGS?
Emergency fund
(3-6 months of
expenses)
Retirement
(especially important
for enterpreneurs)
Long term goals
(This can increase if
your emergency fund
is in place)
5%
10%
5%

6. Risk
Risk is the chance that an
investment’s actual outcome
will be different from the
expected outcome.
What is
what?

7. Return
Money made or lost on an
investment.
It can be in the form of:
• price change
• Interest
• dividend
What is
what?

8. Price change
If an investment’s price
changes with time, the
change is realized as return
by the investor.
What is
what?

9. Interest
Interest is paid for tying up
your money in savings and
investments.
What is
what?

10. Dividend
The dividend is paid to the
eligible shareholders from a
corporate’s profits.
What is
what?

11. Pro
Money kept on a current account can
be easily accessed and exchanged
for goods or services.
Contra
It is hard to keep apart the money
you can spend and the money you
should save on a current account.
Current
account

12. Pro
Money kept on a savings account
can be easily accessed while
accumulating modest interest
A savings account helps keeping
money to be saved apart from money
to be spent.
Contra
It takes some effort to transfer
money from your savings account to
a current account before spending.
Savings account

13. Pro
Bonds provide medium range interest
rate at low risk.
Contra
A bond is usually has a fixed term of
a few years. Early access to your
money takes time and your
accumulated interest would be lost. .
Bonds

14. Pro
Stocks has high interest rate
potential.
Stocks of well known, established
companies are easy to sell anytime
and are considered liquid assets.
Contra
Stock markets can be volatile and
your interest rate is not guaranteed.
Stocks of less well known
companies may take time to sell and
could be condiered illiquid.
Stocks

15. Go to the link below and fill out the quiz!
LINK
How many points did you get?